Macy's reported second quarter results this week showing its turnaround effort continuing to gain traction, giving the department store chain enough confidence to raise its full year guidance for a second time this year. The results extend a recovery that has been building gradually over the past several quarters.
Same store sales rose 2.7 percent in the quarter, marking the fifth consecutive quarter of growth and comfortably surpassing Wall Street's expectation of 0.8 percent growth, according to data from S&P Global Market Intelligence. The company's luxury chain, Bloomingdale's, once again outperformed, posting sales growth of 11.3 percent, while its beauty chain Bluemercury grew sales 6.2 percent. The flagship Macy's brand itself grew sales 1.1 percent, with newly renovated stores posting a somewhat stronger 1.9 percent gain.
The results are the latest evidence supporting Macy's multi year Bold New Chapter strategy, now in its third year, under which the retailer has been closing about 150 underperforming stores while investing more heavily in its remaining roughly 350 locations. The approach reflects a broader trend among legacy department stores of concentrating resources on their strongest performing locations rather than maintaining a larger, less profitable footprint.
The improved performance comes at a moment when consumer facing companies more broadly are contending with a less certain economic backdrop, including higher energy costs and the prospect of higher interest rates. Macy's renewed growth suggests that, at least for now, shoppers are continuing to spend at its stores even as broader financial conditions tighten.
Investors will be watching whether other major retailers report similar resilience as the holiday shopping season approaches later this year.
What is Macy's Bold New Chapter strategy?
It is a multi year plan under which Macy's is closing roughly 150 of its weaker performing stores while investing more in its remaining locations and its Bloomingdale's and Bluemercury brands.